Brexit: where the Isle of Man stands

On the 21st July, a little under a month after the announcement of the UK’s EU referendum result, we gathered a dozen leaders from the Isle of Man’s public and private sectors in a room at Boston HQ. The goal was to discuss the possible impact on the Isle of Man economy and how to respond. This is the first of four blogs unpacking the discussions and comments from that day. You can also read the full meeting transcript here.

The first question raised by our Group CEO, Alex Fray, for the Forum’s response was regarding what sort of relationship they expected the UK to negotiate with the EU, which naturally opened a discussion as to the Isle of Man’s role in both negotiations and the end result. Overall, there was a feeling of cautious optimism amongst the individuals at the table, despite many acknowledged risks arising from the general uncertainty about the future.

The group looked at quite a number of possible models the UK could follow, with certain contributors feeling that a Norwegian model would be the most likely outcome and that this would broadly be positive for the Isle of Man as it would be closest to the status quo. This was challenged, however, by those who felt that anti-EU sentiment remained relatively ingrained in the UK outside of London and Scotland and so anti-EU elements would continue to effectively agitate for a more radical settlement in terms of EU budget contributions and immigration limits.

Regardless of this disagreement, the Forum was broadly agreed that the Island wasn’t placed in a purely negative position by the upcoming Brexit negotiations. Whilst uncertainty continues to be one of the buzzwords surrounding the topic, those who were currently making UK and Isle of Man investments remained positive about them. Several contributors also raised positive signs of global confidence in medium to long term prospects for Britain, including large post-Brexit property purchases in London. Most felt that Europe was set to change considerably more than it has already, with some considerable speculation as to the likelihood of Brexit ‘contagion’ spreading to other areas of the EU.

One of the topics that had the Forum members most animated was the perceived position of the Isle of Man (and the other Crown Dependencies and Overseas Territories) in the negotiation process. It was initially felt by most of the private sector representatives that the offshore centres would have very little impact on the outcome of the negotiations – and that they could even be used against their will as a bargaining chip by the UK. This, however, was strongly challenged by the public sector representatives, who stressed that the UK takes its sovereign responsibilities very seriously and that Whitehall had pro-actively engaged with the governments of the Isle of Man and its peers within less than ten days of the vote, asking for their input into the process. This, it was felt, was indicative of a strong relationship between the Isle of Man government and their UK counterparts – stronger perhaps than that held by competitor jurisdictions due to the Island’s ‘good behavior’ in recent years, in terms of keeping an exemplary regulatory record.

These macro-level discussions highlighted, if anything, the wide range of possible outcomes that remain on the table for Brexit negotiations. As such, they set the scene for broad ranging discussions as to the threats and opportunities that could arise for the Isle of Man in the medium term, which will be the subject of parts two and three of this blog series. Stay tuned!

Alex McNee - Group Director - Fiduciary

Alex is responsible for Boston Group’s fiduciary business. His appointment as Managing Director was driven by our ambitions to deliver an unrivalled service to a growing fiduciary client base. Alex has a wealth of experience serving international ultra-high net worth individuals as well as lending his experience to the Boards of numerous trading companies.

Boston Limited is licensed by the Isle of Man Financial Services Authority.
Boston Trust Limited is licensed by the Malta Financial Services Authority to provide trust and fiduciary services in terms of the Trusts and Trustees Act.